Andy Mukherjee is a Bloomberg Gadfly columnist covering industrial companies and financial services. He previously was a columnist for Reuters Breakingviews. He has also worked for the Straits Times, ET NOW and Bloomberg News.

Stable oil prices are fine, and a recovery in the Baltic Dry Index can't hurt. But seriously, how long can Singapore's banks remain hostages of the island's shipping and offshore marine services industry?

This Ship Must Sail

Oil prices and dry-bulk shipping rates have had an outsize influence on Singapore banks' shares for nearly two years

Source: Bloomberg

That question is bound to be asked as another earnings season comes burdened with a high-profile bankruptcy. Ezra Holdings Ltd., the Singapore-listed offshore services group that sought protection from creditors in the U.S. last month, counts DBS Group Holdings Ltd. and Oversea-Chinese Banking Corp. among its biggest unsecured creditors. United Overseas Bank Ltd., the third of the city's three homegrown lenders, is on the hook too. The trio's claims total $642 million, most of which is unsecured.

Providing for losses on soured corporate debt is one thing; finding new borrowers to replace the duds is another. Mortgages should have been the natural fallback. Yet, unlike Hong Kong, which is in the grip of property mania, Singapore's residential real estate market is comatose after a record 14 straight quarters of declines in apartment prices.

In 2013, developers offered almost 16,000 new homes in Singapore, compared with 11,000 in Hong Kong. Last year's figure for Singapore was below 8,000, while Hong Kong's primary sales figures almost touched 17,000 for a third year.

A Tale of Two Cities

Hong Kong saw fewer new home sales in 2013 than Singapore; since then their property market fortunes have reversed

It's too early to say if a recovery in Singapore's new home sales in March was anything more than a flash in the pan.

While bankers rue the absence of a red-hot property market, their salvation is the so-called "net stable funding" requirement. As regulators dissuade lenders from backing a long-term asset like a mortgage with short-term interbank loans, Singapore's local banks, which get plenty of lazy deposits, have a competitive advantage over their foreign rivals.

Big Three's estimated share of housing loan market

47%

Jeremy Teong, an analyst at Phillip Securities Pte, estimates that DBS, OCBC and UOB had roughly 47 percent of the island's housing loan market at the end of last year, compared with 43 percent at the end of 2014. Their market share may increase further in 2017. However, competing for good-quality mortgage business could also mean sacrificing margins, Teong says.

Hong Kong banks, too, are slashing mortgage rates, but they have the volumes to compensate. Where can Singapore banks find new customers when wage incomes among condo dwellers declined last year?

Home Economics

Singapore's private apartment dwellers saw average household income from work shrink in 2016 from a year earlier

Source: Singapore Department of Statistics

One answer to that question may be: the government. Even as construction stagnates in the private sector, the public sector could award as much as S$24 billion ($17 billion) in new contracts this year, up from S$15.8 billion last year, Singapore's Building and Construction Authority estimates. Given UOB's dominance of the construction loan market, it might have the momentum to ride this growth, according to Phillip Securities.

Overall, though, the outlook is far from great. Although the three banks' shares are up between 7 percent and 11 percent so far this year, a solid earnings recovery is not in sight. For that, the lenders desperately need more -- and more cheerful -- borrowers.

A Hong Kong-style housing bubble would have been nice. In its absence, bank CEOs will have to amuse themselves with stable crude prices and shipping rates, and hope the carnage in corporate lending is over.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.